From
Buyincomeproperties.com
Never Solely Fund Developer’s Investment Property
By Buyincomeproperties..com
Sep 29, 2005, 04:20
There are two things that an investment property developer should never ask an investor who is not a millionaire:
1. “Will you fund the construction of this project by yourself? That is the only way that it can be built and you might be sequestrated after a while.”
2. “Will you use my mortgage brokerage to obtain your home loan? That is the only way that you will ever receive any home financing.”
There typically is one thing that leads mortgage developers to ask for money solely from one investor; “SELF-INDULGENCE.” They usually only want to indulge your money into their own THIEVING POCKETS. Also, scrutinize any lone secured loan offers.
On that first query, when an investment real estate developer speculates, they utilize their own money and then sell the project on completion. That developer accepts the chance of finding buyers to pay the price. The developer might auction “plot and plan,” And then a bank must confirm different stages of a buyer’s payment withdrawal, authorized by that buyer. Thus, you check and never pay for labor that is not yet done.
Still, if the investment property developer sequestrates {liquidates} before finishing the project it might cost you other than anticipated because of contracting a new developer.
When borrowing from an investment property developer, especially as plot and plan, always make sure you have a reputable developer. Take the time to find out about previous projects from them and the BBB. Your investment home is worth the time.
Second, the dubious queries, when an investment real estate developer says that you are compelled to use their mortgage franchise to obtain your home loan, never believe that.
Beware of contracts to purchase which force you to use a lead mortgage originator who has a previous arrangement with the developer. This may preclude you from using your good credit and low mortgage interest rate at your own mortgage broker.
Mortgage originators sell mortgage leads and earn a living doing it, being paid commission commercial real estate brokerages. If you have one, it is essential that you ensure that the originator gets quotes from every local bank or at least from the biggest.
When searching mortgage loan leads, some originator/mortgage broker – partnerships must be monitored for a second opinion. For instance, the Loanlink Group – they are a reputable mortgage origination company, which include Wizard, FinX and Quantro; however, they do not approach FNB for any quote. This may disadvantage you, principally if you are FNB’s client and might get their best mortgage rate.
Also when investigating mortgage leads, The National Association of Mortgage Originators (Namo) is the chief self-regulatory body of the mortgage origination industry. Their constitution states their main objective being to “promote, advance and protect the interests of the mortgage consumer and mortgage lending institutions.” USE THEM.
Saul Geffen, chief executive of MortgageSA and a member on the national executive committee of Namo, states that Namo was not empowered to police commercial arrangements between their members and any other industries. Despite the fact that he defends an originator’s right to bond with a developer, he believes “freedom of choice should prevail when it comes to the consumer’s right to apply for finance through any means they choose.” Another words, always search mortgage loan leads in diversity.
Never sign any contract where all of your rights are snatched away from you. Before you sign your name to any offer to purchase, be sure that you comprehend all of its clauses. If you do not, then immediately take the contract to your real estate lawyer to scrutinize it.
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